Cyprus considers one capital markets exit in 2018, FinMin says

Cyprus is planning to tap the international capital markets in 2018 with one EMTN issuance in the region of Euros 0.75 to Euros 1 billion, the Finance Ministry said on Friday.

The Republic of Cyprus is considering accessing the international market in 2018 with one benchmark new EMTN of the order of Euros 0.75 to Euros 1.0 bn subject to market conditions in order, primarily to refinance public debt due within the year and secondly, to enhance its re-established market presence, FinMin said in its 2018-2021 Stability Progamme issued today.

Depending on the size, any over-financing in 2018 will be used to enhance the liquidity position of the state to a level sufficient to prefund a substantial share of the 2019 financing needs, FinMIn added.

According to the document, financing needs excluding the banking sector amount to Euros 0.9 billion in 2018, and will be covered by domestic treasury bills, retail bonds and EIB and Council of Europe Bank loans.

The Cyprus public debt spiked from Euros 18.7 billion in end 2017 to 21.05 billion by April 2018 due to the issuance of domestic bonds amounting to Euros 2.35 billion to the state-owned Cyprus Cooperative Bank, in a bid to facilitate the tender process launched by the bank. As a result, the public-debt-ratio is expected to reach 105.6% of GDP by the end of 2018, marking an increase of 8.1 percentage points compared with 2017.

The Finance Ministry noted however, that the debt-to-GDP ratio is projected to exhibit a downward trend declining to about 100%, 94.6% and 88% by year end 2019, 2020 and 2021, respectively.

The downward trajectory in the debt-to-GDP ratio is mainly attributed to the strong growth rate projected to exceed 3% on average until 2021.

According to the Finance Ministry, the Cypriot economy is expected to grow by 3.9% in 2018, followed by a slight deceleration to 3.6% in 2019. In 2020 and 2021 the Cypriot GDP will expand by 3.2% and 3.0% respectively the FinMin added.